New York Times Co (NYT) 2018 Q3 法說會逐字稿

Good morning, and welcome to The New York Times Company's Third Quarter 2018 Earnings Conference Call.

(Operator Instructions) Please note, this event is being recorded.

I would now like to turn the conference over to Harlan Toplitzky, Executive Director of Investor Relations and Financial Planning and Analysis.

Please go ahead.

Thank you, and welcome to The New York Times Company's Third Quarter 2018 Earnings Conference Call.

On the call today, we have Mark Thompson, President and Chief Executive Officer; Meredith Kopit Levien, Executive Vice President and Chief Operating Officer; and Roland Caputo, Executive Vice President and Chief Financial Officer.

Before we begin, I would like to remind you that management will make forward-looking statements during the course of this call, and our actual results could differ materially.

Some of the risks and uncertainties that could impact our business are included in our 2017 10-K.

In addition, our presentation will include non-GAAP financial measures, and we have provided reconciliation to the most comparable GAAP measures in our earnings press release, which is available on our website at investors.nytco.com.

With that, I will turn the call over to Mark Thompson.

Thanks, Harlan.

Good morning, everyone.

This was an encouraging quarter for the New York Times.

Strong growth in digital subscription saw us achieve some important new milestones.

We now have more than 3 million digital subscriptions and 4 million total subscriptions.

There was a marked sequential improvement in our advertising performance, with digital ad revenue returning to strong growth while print ad declines moderated during the quarter.

As a result of these and other factors, total company revenue grew by 8%.

It was the seventh consecutive quarter of revenue growth.

Let me begin with the digital subscription story.

In the last earnings call, we said that Q3 tends to deliver higher numbers of net new subscribers than Q2, which, since the launch of our pay model, has typically been the quietest quarter of the year.

And so it proved with a slow start to the quarter followed by a very strong late August and September.

By the end of the quarter, we'd added 143,000 net new subscriptions to our digital news product and an additional 60,000 subscriptions to Cooking and Crosswords for a total of 203,000 net new subscriptions.

We attribute these numbers to several factors: the seasonal boost we see every year towards the end of the quarter as much of the world goes back to school after the summer; a suddenly electrifying news environment with events that played to The Times' strengths like the Kavanaugh hearings and the blockbuster op-ed by Anonymous; the growing strength of our Cooking product, which has now passed the 120,000 subscription mark; and the launch of a more deeply discounted introductory offer for our main news product in late August.

You're going to see us continuing to experiment with introductory pricing, meter count and ferocity, registration and login and bundling through Q4 and into 2019.

We're pleased with our progress so far, but believe we have the skill to accelerate subscriber growth further.

We're continuing to spend marketing dollars efficiently and are monitoring subscriber acquisition cost and lifetime value carefully, but we will not hesitate to invest heavily in future growth where it makes sense.

Indeed, we've launch a new brand marketing campaign, the truth is worth it, which includes TV spots this week.

We also believe that our success with subscriptions across digital and print is a tribute to the quality and creativity of the journalism produced by our colleagues in the New York Times newsroom and editorial departments, and is a validation of our strategy of ramping up investments in journalism.

Agenda setting investigative journalism, outstanding global coverage, striking advances in our coverage of business and tech, a broadening of the voices and perspectives in our opinion pages and groundbreaking new products and podcasts are all paying dividends in audiences, subscriptions and new opportunities for advertisers.

And speaking of new audiences, Times journalism is now read in every country on earth.

According to our own data, we have at least 1 online reader from every member of country of the United Nations, including Tuvalu and Antarctica.

Overall subscription revenue, including print, grew by nearly 5% year-over-year to $258 million.

And we're also encouraging numbers on the advertising side.

We've always expected a stronger second half of 2018 than the first, but are still pleased to have grown digital advertising in the quarter by 17%.

Our strategy of driving growth with large-scale editorial partnerships with the world's leading brands is proving successful.

We're also very encouraged by the pipeline heading into Q4, the biggest advertising quarter of the year.

Print advertising declines moderated in the quarter, decreasing by less than 1% year-over-year.

As a result, overall advertising revenue increased 7%.

Digital advertising represented 47.5% of the total advertising number.

Now Roland will discuss cost in detail in a moment, but I will just note that additional cost, including in marketing and in our newsroom, both of which are associated with our digital growth strategy, meant that our adjusted operating profit was flat year-over-year at $54 million, despite the increase in revenue.

We expect investment associated with growth to keep our cost elevated for some time to come as we continue to add new talent and resources to our newsroom and opinion departments, experiment with different marketing tactics at every level of the funnel, improve our core digital product and debut new products and prepare to launch our new TV show, The Weekly.

It should be clear from my remarks this morning that we have high confidence in our strategy.

It is true that intense interest in U.S. politics gave us additional digital momentum in late 2016 and early 2017.

We remain determined to cover that story with more authority and more original journalism than any other news provider with the latest test of that coming as soon as next week with the midterms.

But our strategy and current digital growth does not depend on that or indeed on any single strand of news.

It is broadly based, includes a wider range of the news and features than any of our competitors, not to mention lifestyle products, audio, television and a thriving International business.

It is this breadth and our proven ability to extend Times quality to new topics and new media that convinces us that we can scale our digital business further and faster than anyone else.

But now for the detail of the quarter, here's Roland.

Thank you, Mark, and good morning, everyone.

As Mark said, this quarter represents encouraging progress for the company.

Adjusted diluted earnings per share was $0.15 in the quarter, $0.03 better than the prior year.

We reported adjusted operating profit of approximately $54 million in the third quarter, which is flat compared with the same period in 2017.

Total subscription revenues increased 4.5% in the quarter, with digital-only subscription revenue growing 18% in the quarter to $101 million.

On the print subscription side, revenues were down due to declines in the number of home delivery subscriptions as well as the continued shift of subscribers moving to less frequent, and therefore, less expensive delivery packages.

Total daily circulation declined 9.9% in the quarter compared with the prior year, while Sunday circulation declined 6.7%.

Quarterly, ARPU declined less than 1% compared to both the prior year and prior quarter, largely a result of the $1 per week promotion introduced domestically in the last 6 weeks of the quarter.

We expect that the more aggressive promotional offer, which yielded strong net subscription additions in the quarter and other promotional tests will continue to put downward pressure on ARPU.

Total advertising revenue increased 7% compared to the third quarter of 2017, our best overall result in recent memory, with digital advertising growing 17% and print nearly flat.

The increase in digital advertising revenue was largely driven by our creative services business and growth in our traditional direct-sold advertising on our digital platforms.

The relatively strong print advertising result was mainly due to growth in the financial, technology and telecommunications categories, offset by declines in entertainment and luxury.

As you can imagine, we are very pleased with the print numbers in the quarter, however, we do not expect similar results in the fourth quarter.

We do see these quarterly results as confirmation that there remains a place for print in a marketer's total media buy today.

Other revenues grew nearly 50% versus the third quarter in 2017 to $38 million, principally driven by growth in our commercial printing operations from the Newsday suite of products.

We are nearly complete with the ramp-up of the Newsday work.

Growth in other revenues was also driven by 4.5 additional floors of rental income from our headquarters building.

We recently executed a lease on an additional floor and now have signed leases on 5.5 of the 7 floors we've made available through our headquarters project, and expect to execute leases on the remaining 1.5 floors and begin recording rental income from them in the next few quarters.

Affiliate revenue from the product review and recommendations website, Wirecutter, also contributed to growth in other revenues.

GAAP operating costs increased 8%, while adjusted operating cost increased 10% in the quarter.

Costs grew primarily as a result of marketing expenses to promote our brand and products, cost associated with our growing commercial printing business and continued investment in our journalism.

The growth in marketing costs, the largest driver of expense growth in the quarter, was directly related to the strong net subscription additions we are reporting.

In the quarter, we spent into elevated demand unleashed with the introduction of a $1 per week promotional offer, something we had already tested internationally.

As a result, we were able to efficiently grow subscription acquisition spend, with expected returns that remain well above our internal hurdle rate.

As Mark said earlier, you can expect that we will continue to experiment in the coming quarters.

We recorded 1 special item in the quarter, an approximately $5 million gain from a pension plan liability adjustment.

Our effective tax rate for the quarter was 28.8%.

Moving to the balance sheet.

Our cash and marketable securities balance increased by $15 million during the quarter ending at $795 million.

Total debt and capital lease obligations, principally related to the sale-leaseback of our headquarters building were approximately $253 million.

Let me conclude with our outlook for the fourth quarter of 2018.

As a reminder, fiscal 2017 included an extra week and therefore, the fourth quarter of 2017 contained 14 weeks as opposed to the 13 weeks in 2018.

We disclosed the estimated impact on revenue of this extra week in our fourth quarter 2017 results.

However, estimating the cost impact of this extra week is more difficult and therefore, we did not disclose this detail.

Our earnings press release, which we issued earlier this morning, includes revenue guidance as compared to Q4 2017 inclusive of this extra week.

Now on a comparable 13-week basis, total subscription revenues are expected to increase in the mid-single digits compared with the fourth quarter of 2017, with digital-only subscription revenue expected to increase in the mid-teens.

Overall advertising revenues are expected to be approximately flat compared with the fourth quarter of 2017.

And digital advertising is expected to increase in the mid-teens.

Other revenues are expected to increase approximately 40%, largely due to anticipated growth in our commercial printing operations.

On a 13-week 2018 to 14-week 2017 basis, operating costs and adjusted operating costs are expected to increase in the mid-single digits compared with the fourth quarter of 2017 as we continue to invest in marketing and our newsroom as well as ramp up our commercial printing operations.

And with that, we'd be happy to open it up for questions.

(Operator Instructions) The first question comes from Alexia Quadrani with JPMorgan.

A couple of questions.

First, on the subscriber growth in the quarter.

Thank you for giving us the color about how it picked up in August and kind of ran through September.

I'm just trying to get a little bit more information, if possible.

I'm trying to get a sense of how much was sort of peaked around certain new stories or was it the promotional activity?

Or is it really just the seasonality getting better?

And if there's any more data you can give us around that to give us a sense of how should we think about it trending going forward, that would be very helpful.

And then just any commentary on ARPU rate that we saw in the quarter.

Is that a good run rate going forward?

Or was it heightened promotional activity, maybe it softens a bit more?

And anything you can say on churn.

Meredith, you first.

Want to tackle those?

Yes.

I'm happy to.

Good morning Alexia.

I think the sort of story of the subscription growth was compounding effects of the number of things.

I think the first, and probably most significant driver, was the $1 a week introductory offer domestically, which ran I think the last 6 weeks of the quarter.

So that had a big impact.

And I think clearly tapped into a fair amount of otherwise untapped demand at the lower end of the demand curve.

But it wasn't the only thing we did.

We also experimented with more ferocity.

So we took meter down to a count of 4 in September.

And we've been indicating we were going to be more dynamic about how we use meter.

We did quite a bit more as Roland described paid marketing.

We were able to do that very efficiently.

And then we did a bunch of things to optimize the pay flow.

And we also did some things to signal to users sort of where they were in meter count more aggressively.

And I think all of that taken together played a big role.

And I would say all of those are things that we intend to continue doing.

And if I could just add one thing.

I think the getting better, significantly better, specifically with smartphones and smartphone conversion and focusing on smartphone.

And the background of very strong international performance, which continued in the quarter without the same abrupt change in introductory offers, those are factors as well, weren't they?

Yes.

So Alexia, let me just add to that.

Although we're not managing to ARPU, we do keep an eye on it.

And I'd say the biggest factor here was we had a large number of starts, as you can see from our great net add number.

And we did not have a large number of existing subscribers transitioning to full price in the quarter.

That said, I think you can see additional pressure on ARPU in Q4.

And then, you asked -- sorry.

I was just going to answer the bit you asked about was it any particular story?

I think, in general, we've been operating in a period now with the heightened news cycle and that is always good.

And we see spikes when, in that news cycle, The Times does something that is particularly distinctive.

So the anonymous op-ed, which Mark mentioned, had a role some of the coverage of the separation at the border where The Times was breaking stories played a role.

But we're getting to a point where those spikes I think are -- they are helpful, but they play a less outsized role generally.

If I could just underline that point about spikes, where it's Times journalism, whether it be in investigative journalism, be it as Anonymous was in the opinion pages, where we have stories which are particularly ours, which the Times has come up with or where the Times has got a key angle, do still make a striking difference.

And it's a great vindication of the policy of the editor of the New York Times, Dean Baquet to focus so heavily and we've also focused additional investment in investigative journalism.

I think that's paying off straightforwardly in terms of impact and indeed in subscriptions.

I also think that the extraordinary process of renewal and expansion of voices and perspectives by James Bennet and his colleagues in the opinion pages.

Again, we can feel that paying dividends in spikes in audience and in impact and it's fair to say also in subscriptions when they've got something dramatic to unveil.

That's right.

And we have just broken a new ad campaign this week focused on the distinctiveness of that reporting.

So there's a spot about the 18-month investigation we did into the Trump family wealth and taxes.

And there's another spot about that reporting that I mentioned about family separation at the border.

And it sounds like given that huge success you've had on the marketing side, which is working both because you're smart at it and you're obviously, trying different ways that seem to be quite successful.

Should we assume that in the guidance for Q4, for the elevated expense growth, that the bulk of that increase sounds like it's going to be marketing heavy.

I know there was incremental spend around the CP, except partial pay product, but it sounds like it's mostly marketing?

Yes.

I think you can assume we are going to keep spending more in marketing because we're finding ways to do it efficiently.

And I think we have a fair amount of running room there.

I want to say though Alexia.

We're really focused -- I mean, we do not think we have optimized either the user experience of The Times in terms of how the products -- the digital products work as much as we could.

And because of that, we believe there's ways we can change and develop both that user experience.

And also, as Meredith was hinting, but kind of the way in which the customer journey plays out, which can significantly improve our performance.

But this is cost which doesn't as it were doesn't -- the cost doesn't grow at the same rate as the scaling.

So it's potentially a very efficient way of making a relatively small amount of investment and increasing and improving the efficiency of the product in engaging and converting audiences.

So although in Q4, I think you're going to see continued elevated marketing spend, we're working hard on figuring out ways of making the product more effective and more sticky, which do not include as it were scaling cost with scaling audiences.

The next question comes from Doug Arthur with Huber Research Partners.

A couple of questions.

I'm wondering if you can break -- sort of provide some breakdown on the production cost increase in the quarter.

You normally break out newsprint.

You didn't do that this quarter.

I'm kind of trying to get a sense for how much of the almost 10% increase was related to the commercial printing project as well?

So that's question one.

Sure.

So actually, the production costs are split across couple of areas.

One of which is the commercial printing, which, as you know, includes both the cost of newsprint, which we pass through to the client, and the cost of our people in the production center.

But also, we've got costs that fall into the production line that are in news and editorial.

So that's continuing the theme of investing in our journalism.

Those are the 2 I'd say, the 2 biggest areas contributing to the increase in the production cost in the quarter.

And I know it's a small item, but what was your newsprint cost up in the quarter?

Get that for you.

About $4 million.

Okay.

Second question kind of bigger picture.

Mark, you've sort of made some hints recently about a -- a more aggressive capital return to shareholders, either dividend or buyback.

I know the sale leaseback date is a ways out, but any comments on that at this point?

No.

Not really.

What I've said in the past is this is an item, which is always on our agenda.

It's certainly on our agenda at the moment.

When we've got something to say, we'll do that.

But nothing to add, except for the fact that we do not believe -- to repeat, that we do not believe, the right level of leverage for the company is 0. We absolutely believe in the efficient use of the balance sheet.

We are -- as you can see, we are in the broader sense are willing to invest judiciously to try and accelerate our digital growth.

We're very happy with the company -- the small companies we've bought recently.

We continue to look at whether there are potential tuck-in investments to help us execute our strategy more effectively.

We are not expecting anything strategic but we are looking at that, and obviously, we're looking at the implications of the medium-term impact of some of the cash positive terms there have been, the lower tax profile of the company.

The retirement of debt.

And the although it doesn't happen until the latter part of 2019, the change in status of our ownership with this building with our execution of the right to buy back the building.

And for the building to go back into full ownership.

So all of those factors as well as the track of the business are in our minds.

When we've got something to say, we'll tell you.

Okay.

And then, one final detail question I noticed in the discussion on liquidity, that you set aside or have set aside $68 million of securities that's collateral for letters of credit for the leasing.

Can you explain that?

(inaudible)

Yes.

So those -- as we sign and execute leases, there is letters of credit on the both sides having to do with building out the space and whatnot.

So those will go away when we execute the transaction next fourth quarter on the lease sale back.

So that's sort of a temporary hold on the security?

Correct.

That's correct.

The next question comes from Craig Huber with Huber Research Partners.

Few questions.

First, what quarter, just to be specific I think you might have just said this, when do you expect to get out of the sale-leaseback?

Did you say fourth quarter next year?

Fourth quarter of '19.

And then, I'm just also trying to just understand.

This is an old issue here but the sort of -- I guess the board's mentality, the family's mentality about not wanting to buy back stock and just accumulate cash here.

Obviously, the stock has gone up here quite well over the last year plus year and stuff.

Now you've got the envious problem here of do you start buying back stock at a much higher level because you waited so long?

What was the mentality of waiting so long?

I mean, I assume from your guys perspective you feel very confident having listened to you several times here about the direction of the payroll and stuff.

But why the delay here?

If you want to return cash but you are dealing with a much higher stock price now, your dividend is very small.

Just what's the sort of game plan on that front, please?

Because I get that question a lot from investors.

I'm not sure I can help beyond my previous remarks.

I'm familiar with all the points you make.

You've heard me say that the balance sheet profile of the company and its free cash flow generation and likely future free cash flow generation very much in our minds.

Of course, we discuss the balance sheet regularly with our board, I've been chief executive for very nearly 6 years now, there's not been a single example of a difference of opinion or any hint of disagreement between the trustees of the Ochs-Sulzberger family trust and the our board, which is the majority of independent directors on the issue of capital return and balance sheet.

We talk to both those groups of people regularly about this issue, it is much in our minds.

We do not believe a 0 leverage and debt freedom and it is the right level of leverage for this company, nor do we believe in endlessly accreting cash with no good reason to do so.

When we've got something more and something tangible to say about that, I can't promise you will be the very first to hear but you'll be amongst the first.

I think you'll find that we did buyback about $85 million worth of stock a few years ago.

So it's not that we would never do that.

But if you want to go in the rearview mirror having a conservative balance sheet served us well during the period with the industry in transition and quite frankly, us in transition.

No.

I definitely recall that from many years ago when outside investors pushed you guys back last decade and before to buy back a lot of stock at much, much higher prices.

And it turned out to be very unfortunate.

I'm sure it is all family and stuff.

My other question here on the cost front.

As we think about your cost guidance for the fourth quarter, and if you take out what you think your incremental spend will be on the marketing side and this new contract on the commercial printing side, what should we sort of think of the underlying rest of the cost do on a sort of flat year-over-year basis?

I mean, those are, I'd say, 2 of the major drivers.

We also want to keep investing in our newsroom.

So I would not go so far as to say flat because we have some other areas that make sense to invest in that supports our digital growth, like our product and design area, our tech area and obviously, our journalism.

That said, those are the 2 that you mentioned, the commercial printing ramp up and the marketing are our 2 largest growth areas of spend for Q4.

And then also, just some extra clarity here.

The $163 million for total production cost in dollars.

Would you mind just breaking that down to the wages and benefits and other line, I guess the raw material is up $4 million, but the other $2 million, please rather than have to wait for the 10-Q, if that's possible?

Yes.

So yes.

The comp and benefits is about $95 million, $96 million of the $163 million.

Okay.

Looking back into the other from there.

Okay.

And then, Meredith, your marketing cost helped drive digital subscriptions.

I'd be curious to hear where the best dollars have been spent there say in the last year or so.

So what -- on keywords versus branding where have the best dollars been spent there?

Yes.

That's a good question.

When I started looking after the subscription business, we spent 100% of our money on direct response.

And we have pretty dramatically shifted that so it's about half now.

So we've increased our spend and also shifted the mix there and I would say we think of marketing spend in 3 buckets.

There's sort of top of the funnel.

So the work I just described to drive affinity and willingness to pay.

Think television spots, digital video spots, brand ads outdoor.

There is a lot of work going on now in the middle of the funnel.

And I think we're just getting started at this.

I think this is a very efficient way to spend money where we essentially spend money to get people to download our app, to get them to engage with particular kinds of content that will bring them closer to the gateway or to get them to register and then ultimately, log in and make a relationship with us.

And I -- we've done a fair amount of breadth of experimentation with that, in the last two quarters and particularly in this last quarter proving we can do it very efficiently and then, just to say, both of those buckets make direct response work much more efficiently for us.

So I don't know if that answers the question but it was an attempt.

I appreciate that.

If I could just ask 1 more.

This new TV show, the Weekly.

I'm curious, when will that start?

And then will we see revenues show up in the other revenue line, a boost in cost in the production cost?

And how is this sort of going to play out, please?

We have not announced the date but it will start in the early part of next year.

And Roland, I think you have to answer where the revenue shows up.

I think we're talking about other.

There's other revenue and production cost as you know we've engaged a production company where the lion's share of the expense is going to be made.

I think you said in the past, you're expecting to be at least breakeven.

Correct?

Yes.

This will have I mean, it is going to have, we think it is going to have a big effect on the brand but as far as the initial flow through on the P&L will be negligible.

The next question comes from Vasily Karasyov of Cannonball Research.

I would like to ask a follow-up question about the subscribers, digital on the new subscribers in Q4.

So can you talk please a little bit in more detail about puts and takes from Q3 to Q4?

Because if I look at the previous year, I think net adds stayed pretty constant.

So are there trends that we should be aware of that would change that either way this year, excluding the extra week in the base year?

I should say, the background to this Vasily is that we decided some quarters ago not to guide to net adds.

Not least because we discovered that our predictive ability on that number was not great, and we don't want to mislead anyone.

So we don't give guidance on net adds.

But nonetheless, having said that, Meredith I don't know if you want to give any further color on Q4.

Yes.

I think the work that I described, at the top of the call to Alexia in response to Alexia's question around spending into heightened demand, the sort of broader application of more aggressive introductory discounts and conversion optimization will all continue in the fourth quarter.

So I would expect to see similar outcomes.

We also were saying in the fourth quarter, our cooking product, we tend to see heightened demand for people cooking so we have some optimism there as well.

The next question comes from Kannan Venkateshwar with Barclays.

Just a couple, if I could.

So first is, when we look at the comments around pricing versus spending kind of a dynamic, Mark, it seems like a strategic shift rather than something that's tactical.

Is that the fair way to read it?

In other words, I mean, should we look at the steady-state price points on a normalized basis being lower, but volumes being much higher?

And spending to get there maybe lasting for more than just a couple of quarters?

And then secondly, if you could give us some color around the profile of these new subs who are coming in post promotions from your cohort?

I'll talk briefly.

Then I'm going to hand over to Meredith.

The one thing I want to say is the way I think about what we're trying to do and we're trying to do this internationally and we're in some cases, including low introductory offers we've done international experiments before doing a domestic experiment.

So this is something which is playing out in different markets in different ways.

And we're trying to use different markets to learn things, which we can apply to other markets.

I think of what we're trying to do in terms of pricing and bundling, is effective exploitation of the demand curve, with a focus on -- because we're getting more confident about retention about building the number of subscribers, keeping a close eye on aggregate digital revenue growth and a very close eye on the economics of projected lifetime value less subscriber acquisition cost.

So trying to spend intelligently against internal hurdle rates.

But trying to explore combinations of price and product, which are effective, and we believe will be effective in delivering long-term yield as well as growing the subscription numbers.

So we're very -- one of the reasons we're so focused on products like cooking and crosswords is because of their potential to be bundled into higher-priced offerings.

To have as it were an upward impact on ARPU whereas obviously, lower introductory offers certainly for the period of the offer have a downward pressure on ARPU.

So I see this -- our most expensive product is a 7-day-a-week home delivery of the physical paper, which is over $1,000 outside the New York area.

We have a broad range of prices.

We're trying to develop a sophisticated and tested approach to multiple bundles, multiple offers and differentiated prices to deliver what in the long term will be the best possible yield.

And so although it is perfectly true that we tried in Q3 and no doubt we'll try news in Q4 as well, this quite aggressive introductory offer of $1 a week for the news and opinion product, I see that as part of a broader picture experimentation whose aim is to maximize yield and where I don't even really want to predict at this stage what that is ultimately going to tell you about average price.

Yes.

I would just add that we're generally getting much better at churn.

And at managing churn, we've spent a lot of efforts at what I would call edges of churn.

So getting good at priority moments, like transition to full price and billing issues, involuntary churn, saving stops, that has worked well.

I think, in general the churn performance over the last 3 years has been quite good and compares quite well to other digital and other much larger digital subscription businesses.

But the truth is the real nut to crack on retention and churn is engagement and we're just at the beginning of what I would say real work to get people to get, even our subscribers to engage with us from the outset of their subscription much more often and for longer periods of time.

So it -- that's a long-winded way of saying I think we feel sufficiently confident that if we can bring someone in on introductory offer, we can actually turn them into a lasting subscriber.

On the other side of your question, I'll give an answer that Mark alluded to before, but that is that we actually believe that much of the work from here is to make the product itself, the combination of customer journey, user experience and the programming that sits within it, to make it -- that a much better engine of demand creation and capture.

So that beyond paid marketing, beyond introductory offers, once someone comes to The Times and begins a relationship with us, that relationship is self-propelled because the product itself does that.

And I would say a great deal of our focus in the coming quarters and frankly, in the last quarter, has been on that kind of work.

Yes.

And this is not necessarily entirely kind of heroic moonshot entirely original work, it's about learning intelligent lessons from other people in the market who have done some of these things better than us and getting where we want to be in terms of just kind of intelligent professional optimization.

So some of it I think, I hope will be really creative and innovative but you don't have to believe, you don't have to shut your eyes and imagine some extraordinary unheard of breakthrough to see us getting meaningful improvement through further optimization.

Yes.

I'll add 2 more things.

I think you asked about the character of the new subscribers who are coming on.

There are 2 things that we've been trending in this direction, but we're beginning to see in a fairly outsized way.

More -- the past quarter, we had more women than men subscribe.

And we also saw the largest pickup in growth as far as cohort in people under 24, which I think is pretty interesting.

I think that group has real willingness to pay, deep interest in news and I think with our new introductory offer, we unlock a lot of demand there.

This concludes our question-and-answer session.

I would like to turn the conference back over to Harlan Toplitzky for any closing remarks.

Thank you for joining us this morning.

We look forward to talking to you again next quarter.

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